5 Big Money Mistakes We Make with Our Children

Here are some of the most common money mistakes parents make, and how you can avoid them.

Mistake #1: Believing that your children must have what other children have

Whether you call it a temptation or a trap, many parents talk themselves into believing that their children should have what their friends or peers have. This mistake probably goes back to our childhoods. If we grew up having less than other children, or feeling that we did, then we don’t want it to happen to our children. That’s a large part of why we work so hard to succeed.

Is this a value we want our children to have? Do we want them to have that sense of entitlement and think, “I should have what he has,” or “I’ve got to keep up with the Joneses?” Of course we don’t. Not to say that your children can’t have anything; I’m talking about balance. The main problem with the syndrome of “keeping up the Joneses” is that there’s no cutoff point. Once you’re in that mindset, nothing is ever enough.

The solution: Stop and think. Why am I considering buying this for my children? Will it help them do better in school? Will it add to their cultural enrichment? Will it help them develop skills that they need? There’s nothing wrong with having nice things. But when children get things without realizing the amount of money they cost — and, therefore, the number of hours worked to earn them — there is a value disconnect that can start a cycle of wanting and getting more and more without ever really being satisfied.

Mistake #2: Shielding your children from the cost of things

One of the things that get parents into so much trouble is the idea that you have to shield your children from the harsh realities of money. So many parents say, “We don’t want to take their childhood away.”

Similar problems occur with people who grew up in households that were relatively comfortable. “You just didn’t talk about money. You didn’t ask how much things cost. Polite people simply don’t discuss it.”

Anything that involves money, and exchange of value, can be used as a learning tool. For instance, if your children are looking at the check at a restaurant, explain what the tax is and how to calculate it. You can also show your young ones how to compute a tip and why you leave one. Talk about the economics of being a waiter or waitress, and how the tip is a significant part of their income.

If you haven’t explained yet about tipping to your teenagers, you need to. Shielding your children from the cost of things can keep them from getting a good start on their own.

Mistake #3: Using credit cards to buy stuff for your children when you know you shouldn’t

The biggest financial danger to older teenagers — college students, especially — is the credit card. The teenagers to whom the credit card is the most serious risk are the ones who suffer from a value disconnect. They don’t connect things with the money it costs to buy them; they don’t connect money with the work hours it takes to earn it. When you spend money that you don’t have to buy something that your teenager wants — or even something that your teen needs — you may be thinking, like Scarlett O’Hara, “I’ll think about that tomorrow.”

When Scarlett did that, she was usually counting on herself to work, scheme and improvise to come up with some way to get herself out of the jam she’d gotten herself into. It frequently (though not always) worked for her, but that’s Hollywood. In real life, the message you’re sending to your teenager is that you can buy things without worrying about paying for them, and this is just about the worst message you can send.

Mistake #4: Spending money on your children and not letting your spouse know

Most of us, for one reason or another, grow up being secretive about money, and that’s part of the story here. The other part relates to value disconnect. If you can hide it from someone, it didn’t really happen.

You know you don’t want your children to learn lessons of deception. And you don’t want to put them in a position of conspiring with one parent against the other. Be honest with your spouse about money, especially when it comes to your children.

Mistake #5: Spending money on your children and not letting yourself know

Do your children constantly hit you up for a $20 here and a $20 there? Are they going back and forth between you and your partner, maybe without you even being aware of that? This drip, drip, drip of money can easily happen. Eventually, you will have to say, “No.” It’s not pleasant, but it’s real life. There is not the "money fairy" out there that will keep doling out the dough.

Don’t beat yourself up for making any of these mistakes. We learn from our mistakes. And as George Bernard Shaw said, “Success does not consist in never making mistakes but in never making the same one a second time.”

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